The U.S. Attorney for the Southern District of New York announced a settlement with TCC International LLC, Core Gravity LLC, and Core Club Members Corp. over allegations that they fraudulently obtained federal COVID-19 relief funds intended for small businesses and public-facing restaurants.
According to the civil fraud lawsuit, the defendants falsely certified their eligibility to receive two Paycheck Protection Program (PPP) loans and a Restaurant Revitalization Fund (RRF) grant in violation of the False Claims Act. Under Small Business Administration rules, private clubs were not eligible for PPP loans, and restaurants that did not primarily serve the public or were not-for-profit organizations could not receive RRF grants.
The settlement requires the defendants to pay $360,000 to the United States. The amount is based on their financial ability to pay as assessed by authorities. They have also executed a Consent Judgment for more than $8 million, which can be enforced if required payments are not made. The defendants admitted and accepted responsibility for their actions as alleged in the government’s complaint.
“The Paycheck Protection Program and Restaurant Revitalization Fund were intended to assist small businesses suffering the financial impacts of a pandemic-related lockdown,” said U.S. Attorney Jay Clayton. “New Yorkers supported these programs to protect their neighbors and their community. New Yorkers also want those who abused the programs held accountable. Our Office and the SBA are committed to doing so.”
“Falsely certifying eligibility for Paycheck Protection Program loans and Restaurant Revitalization Fund grants undermines critical relief programs designed to support small businesses and public-facing restaurants,” said SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite. “OIG remains dedicated to protecting the integrity of SBA’s programs and holding accountable those who exploit them for personal gain.”
Court documents state that TCC International LLC and Core Gravity LLC applied for two PPP loans totaling approximately $2.3 million; most of these funds were forgiven by the SBA except about $514,000. Core Club Members Corp., meanwhile, received an RRF grant exceeding $2.3 million without repayment.
The complaint details how both TCC International LLC d/b/a Core Gravity and TCC International LLC d/b/a The Core Club falsely claimed eligibility when applying for first- and second-draw PPP loans respectively, using funds primarily to benefit a members-only club rather than qualifying business purposes under program rules.
Core Club Members Corp., described as a not-for-profit organization with no sales of food or drink to the general public in 2019, was similarly found ineligible when it secured its RRF grant after submitting inaccurate certifications regarding its qualifications.
The case involved intervention by federal authorities following an initial whistleblower lawsuit filed under seal pursuant to the False Claims Act.
Assistant U.S. Attorney Jessica F. Rosenbaum is handling this matter from the Civil Frauds Unit.
